TAXATION (Local and National) By: CES Academy

LOCAL TAXATION

1. Unpaid real property tax is subject to 2% per month interest, up to a maximum period of
a. 12 months c. 36 months.
b. 24 months d. until paid

2. The rate of real estate tax in municipalities within Metro Manila is not more than:
a. One-half percent of assessed value c. Two and a half percent of assessed value
b. One percent of assessed value d. Two percent of assessed value.

3. The schedule of market value for ad valorem tax in municipalities outside Metro Manila is prepared by:
a. Municipal Assessor c. Sangguniang Panglalawigan
b. Provincial Assessor. d Provincial Treasurer

4. The value placed on taxable property by the assessor for ad valorem purpose is -
a. Appraised Value c. Fair Market Value
b. Economic Value d. Assessed Value.

5. The schedule of fair market value in the municipalities in Metro Manila is prepared by:
a. MMDA c. Bureau of Internal Revenue
b. concerned Municipal assessor. d. Sangguniang Bayan by ordinance

6. The following compose the Board of Assessment Appeals in the city of Makati, except:
a. Register of Deeds b. City Prosecutor c. City Assessor. d. City Engineer

7. A taxpayer has ________ to redeem his real property which was levied and subsequently forfeited and
acquired by the Local Government unit due to tax delinquency. (Sec. 179 RA7160)
a. 1 year. b. 4 years c. 60 days d. 3 years

8. In addition to the basic real property tax, a province may levy an annual tax on an agricultural land; planted to
perennial crops with less than 50 trees to a hectare at the rate of not exceeding _______ of the assessed
value of the property. This is called idle land tax.
a. 1% b. 2% c. 3% d. 4% e. 5%.

9. The rate of real property tax in a municipality or city within Metro Manila is:
a. Not more than one percent of the assessed value
b. Not more than two percent of the assessed value.
c. Not more than ten percent of the assessed value
d. Not more than fifteen percent of the assessed value
e. Not more than twenty percent of the assessed value

10. An annual levy on real property equivalent to one (1) percent of the assessed value which shall be in
addition to the basic real estate tax called:
a. Special Real Estate Tax c. Special Education Fund Tax.
b. Special Assessment fund Tax d. Ad Valorem Tax

11. Non-payment of transfer tax within 60 days from date of sale carries a 2% interest per month and a one-time
surcharge of ______%. (Sec. 168-169 RA7160)
a. 10% c. 25%.
b. 20% d. 30%
12. Protest on realty tax assessment should be made within _______ from receipt of notice. (Sec. 195)
a. 15 days c. 45 days
b. 30 days d. 60 days.

13. Protest shall be decided within _______ from date of receipt of protest. (Sec 195 RA7160)
a. 15 days c. 45 days
b. 30 days d. 60 days.

14. Declaration of real property by owner or administrator should be once in every ______. (Sec. 202)
a. 2 years c. 4 years
b. 3 years. d. 5 years

15. Duty of person making improvement or acquiring real estate is to make sworn declaration within _____ after
acquisition or upon completion or occupancy whichever comes earlier. Sec. 203
a. 15 days c. 45 days
b. 30 days d. 60 days.

16. Transferor of real estate property must notify the assessor within _____from date of transfer.
a. 15 days c. 45 days
b. 30 days d. 60 days.

LOCAL GOVERNMENT CODE (RA 7160)

17. Section 215

 Classes of real estate for assessment purpose:
o Residential, agricultural, commercial, industrial, mineral, timberland and special

18. Section 216

 Special classes of real estate (exclusively, actually, directly used )
o Hospital, cultural, or scientific purpose
o Owned and used by local water districts
o GOCC – distribution of water and power

19. Section 217

 Actual use is the basis of assessment

20. Section 218 : Assessment Levels (based on actual use)

On Land Building and Other Structures

 Residential - 20% Residential - from 0% to 60%
 Agricultural - 40% Agricultural - from 25% to 50%
 Commercial - 50% Commercial - from 30% to 80%
 Industrial - 50% Industrial - from 30% to 80%
 Mineral - 50% Timberland - from 45% to 70%
 Timberland - 20%
 On Machinery Special Classes
 Residential - 50% Cultural - 15%
 Agricultural - 40% Scientific - 15%
 Commercial - 80% Hospital - 15%
 Industrial - 80% Local Water District - 10%
GOCC – water/power - 10%

Section224
 Appraisal of brand new machinery shall be the acquisition cost.

Section 225
 Depreciation of machinery should not exceed 5% per year; 20% minimum value should be maintained or
replacement cost as long as it is useful and in operation.

NATIONAL TAXATION

1. The rate of capital gains tax is:

a. 5% b. 3% c. 6%. d. depending on tax base

2. The rate of documentary stamp tax on sale is:

a. 1.5%. b. 3% c. 6% d. depending on tax base

3. The rate of value added tax from February 1, 2006 to present

a. 10% b. 12%. c. 6% d. 5%

4. Donors tax rate for the first P100,000.00 donation is:

a. 0%. b. 1% c. 2% d. 4%

5. Maximum rate for donors tax if the donee is the grandson of the donor:
a. 30% b. 6% c. 12% d. 15%.

6. Maximum rate for donors tax if the donee is the daughter-in-law of the donor:
a. 30%. b. 6% c. 12% d. 15%

7. Maximum rate for donors tax if the donee is legally adopted daughter of the donor:
a. 30% b. 6% c. 12% d. 15%.

8. Estate tax rate for the first P200,000.00 net estate of the deceased person.
a. 0%. b. 2% c. 5% d. 8%

9. Maximum estate tax rate based on net estate subject to tax of the deceased person.
a. 25% b. 11% c. 15% d. 20%.

10. Rate of CWT in the sale of a real estate developer of a household lot priced at P400,000.00 is:
a. 1.5%. b. 3% c. 5% d. 2.5%

11. Rate of CWT in the sale of a real estate developer of a household lot priced at P1,900,00.00 is:
a. 1.5% b. 3%. c. 5% d. 2.5%

12. Rate of CWT for house and lot sold by a real estate dealer worth P2.5 Million is:
a. 6% b. 1.5% c. 3% d. 5%.
13. Rate of CWT in the sale of a realty developer of a household lot priced at P3,360,000 inclusive of VAT:
a. 1.5% b. 3% c. 5%. d. 2.5%

14. Rate of CWT in the sale of a realty developer of a house and lot priced at P3,584,000 inclusive
of VAT:
a. 1.5% b. 3% c. 5%. d. 2.5%

15. In case of sale of real property paid under deferred payment basis, the payment of the
documentary stamp tax shall accrue upon.
a. Notarization of Transfer document c. Payment of the full amount
b. Execution of the Deed of Absolute Sale d. Execution of Contract to Sell

16. Under BIR Revenue Regulation No. 17-2003, the seller of family home who failed to utilize the
proceeds of the sale to acquire a new residence within 18 months from the sale shall be
assessed additional deficiency capital gains inclusive of penalties and:
a. 10% interest per annum c. 25% interest per annum
b. 15% interest per annum d. 20% interest per annum.

17. Per BIR 28-98, the ground floor of a condominium project shall be considered as commercial and an
additional rate shall be added to an established residential zonal value.

a. 10% b. 20%. c. 25% d. 15%

18. In payment of estate tax, an allowed deduction to the gross estate of a decedent is funeral expense
which is:
a. 5% of gross estate or P200,000.00 whichever is lower.
b. 5% of gross estate or P200,000.00 whichever is higher
c. 10% of gross estate or P200,000.00 whichever is lower
d. 10% of gross estate or P200,000.00 whichever is higher

19. After a Deed of Absolute Sale was made, signed and notarized when should the DST on sale of real
property be paid?
a. within 24 hours from date of execution
b. within 30 days from date of notarization
c. within 10 days after the close of the notarization month
d. within 5 days after the close of the notarization month.

20. After a Deed of Absolute Sale was made, signed and notarized when should the CWT on sale of real
property be paid?
a. within 24 hours from date of execution
b. within 30 days from date of notarization (now execution)
c. within 10 days after the close of the execution or date of sale month
d. within 5 days after the close of the notarization month
 21. Withholding tax rate of sale of a socialized housing project registered with the HLURB amounting to
P400,000.00

a. 5% b. 1.5% c. exempted. d. 3%

23. The CGT due on the sale of P2,000,000.00 property with P500,000.00 initial payment is:
a. P100,000.00 c. P20,000.00
b. P120,000.00 d. P30,000.00.

24. To avail of exemption from capital gains in the sale of a family home, the seller is required, among others,
to notify the BIR through a prescribed form of his intention to avail of the exemption. The notice must be
filed within:
a. 15 days from the date of sale c. 60 days from the date of sale
b. 30 days from the date of sale. d. 45 days from the date of sale

24. As an additional requirement to avail of exemption from capital gains in the sale of a family home, the
seller is required, among others, to notify the BIR of his proof of purchase within:
a. 15 days from the date of purchase c. 60 days from the date of sale
b. 30 days from the date of purchase. d. 45 days from the date of sale

25. A bank’s acquired assets which part of its real estate inventories at the close of its accounting
period shall be classified as:
a. Ordinary Assets. b. Capital Assets c. Fixed Assets d. Other assets

26. Capital Gains Tax on the sale of real estate classified as capital asset is :
a. Creditable tax on the sale c. Final withholding tax.
b. Deductible from income tax d. Expanded withholding tax

27. If the property is an ordinary asset, what is the applicable tax?

a. Capital Gains Tax c. Percentage tax
b. Income Tax d. Creditable Withholding Tax.

28. The documentary stamp on lease of real estate is P3.00 for the first P2,000.00 or fraction thereof and an
additional of:
a. P0.50 for every P1,000.00 in excess for first P2,000.00
b. P1.00 for every P1,000.00 in excess for first P2,000.00.
c. P1.50 for every P1,000.00 in excess for first P2,000.00
d. P2.00 for every P1,000.00 in excess for first P2,000.00

29. The capital gains tax on the sale of P2,000,000.00 property with P600,000.00 initial payment is:
a. P100,000.00 b. P120,000.00. c. P30,000.00 d. P36,000.00

30. When a donee of a parcel of land is a stranger, the donor’s tax rate is:
a. 20% b. 6% c. 30%. d. 25%

31. Mr. Bean sold his property for P850,000.00 with a down payment of P500,000.00 and the balance of
P350,000.00 payable in one year was secured by a mortgage on the same property without interest.
Compute for the documentary stamps to register the transaction. ( DST on sale plus DST on mortgage)
a. P12,750.00 b. P8,500.00 c. P8,210.00 d. P13,460.00.

32. The maximum amount of family home considered as allowable deduction from the estate of a decedent:
a. P500,000.00 b. P1,000,000.00. c. P2,000,000.00 d. P750,000.00
 33. The Estate Tax Return shall be filed and paid with the BIR within:
a. 60 days from death of decedent c. 120 days from death of decedent
b. 90 days from death of decedent d. 180 days from death of decedent.

34. In case of false or fraudulent Estate, Donor or Capital Gains Tax BIR form was willfully made, how much
surcharge based on the taxes or deficiency tax shall be imposed?
a. 20% b. 30% c. 25% d. 50%.

35. For purposes of determining whether a seller/transferor can be considered as habitually engaged in real
estate business, he should offer satisfactory evidence that he consummated at least ___ taxable real
estate transactions during the preceding year.
a. Five b. Six. c. Eight d. Ten

36. Property held by the owner as inventory or stock in trade of buy and sell business or used in connection
with trade, business or source of income is referred to as
a. Capital Asset c. Fixed Asset
b. Ordinary Asset. d. Current Asset

37. Unless revalidated, tax credit life is up to:

a. One (1) year c. Three (3) years e. Five (5) years.
b. Two (2) years d. Five (4) years

38. Acquired assets of banks, regardless of amount, are subject to the creditable withholding tax of:
a. 1.5% b. 3% c. 5% d. 6%.

39. The DST on mortgage on real estate property mortgaged at P1,000,000.00 is:
a. P15,000.00 b. P50,000.00 c. P2,000.00 d. P2,010.00.

40. The zonal value of a property can be obtained from

a. Assessor’s Office c. Land Registration Administration
b. Bureau of Internal Revenue. d. All of the Above

41. Based on net gifts, the maximum rate of donor’s tax for a stranger is
a. ten (10) percent c. thirty (30) percent.
b. fifteen (15) percent d. twenty-five (25) percent

42. The DST for Deed of Real Estate mortgage pursuant to the provisions of RA No. 7660 is
a. P 15.00 for every P 1,000.00 of the mortgage amount
b. P 10.00 for every P 1,000.00 of the mortgage amount
c. P 10.00 for the first P 5K of the mortgage plus P 5.00 for every P 5K, thereafter
d. P 20.00 for the first P 5K of the mortgage plus P 10.00 for every P 5K, thereafter.

43. Maximum allowed for funeral expenses

a. 5% of gross estate or PhP200,000.00, whichever is lower.
b. 5% of gross estate or PhP200,000.00, whichever is higher
c. 10% of gross estate or PhP200,000.00, whichever is lower
d. 10% of gross estate or PhP200,000.00, whichever is higher

44. Maximum price for socialized housing with housing component is -

a. P150K b. P180K c. P300K d. P400K.
45. In the case of homelots only for socialized housing, the price shall not exceed ___% of the
maximum limit prescribed for the house and lot.
b. 30% b. 40%. c. 50% d. 60%

46. In the case of homelots only for socialized housing, the price shall not exceed P_______.
c. P100K b. P120K c. P140K d. P160K.

47. In the sale of real estate property, if the transferee is a duly-incorporated REIT (real estate
investment trust) under RA9856, the corresponding DST is subject to ___% of the applicable DST.
d. 0% b. 80% c. 60% d. 50%.

48. Under RR13-2011, RA 9856, otherwise known at REIT, _________refers to an individual citizen
of the Phils., who is working abroad, including one who has retained or reacquired his Phil.
Citizenship under RA9225, otherwise known as the “Citizenship Retention and Re-acquisition Act
of 2003. (Ref: RR13-2011)
a. Overseas Filipino Worker c. Natural born Filipino citizen
b. Overseas Filipino Investor. d. Real estate stockholder

49. Under REIT (RA9856), a principal stockholder who is, directly or indirectly, the beneficial owner
of more than ____% of any class of investor securities of the REIT combined.
a. 25% b. 10%. c. 15% d. 50%

50. Under REIT, a “Public Company” means a company listed with the SEC which has, upon and after
listing, at least (a) _______ public stockholders each owning (b) _____shares of any class and who
in the aggregate own at least (c) ____% of the outstanding capital stock of the REIT at the initial
year; provided, that the minimum ownership shall be increased to (d)___% within (e)_____years
from its listing.
a. 1,000 (a) 50shares (b) 40%(c) 67%(d) 3 years(e).
b. 500 (a) 100shares (b) 20%(c) 57%(d) 2 years(e)
c. 1,000 (a) 50shares (b) 40%(c) 51%(d) 5 years(e)
d. 300 (a) 50shares (b) 40%(c) 70%(d) 1 year(e)

51. Under REIT, taxpayers engaged in real estate business are the following, except:
a. Real estate developers c. real estate lessors
b. Real estate dealers d. real estate investors.

52. Revenue Regulation 12-2011 states that lessors or sub-lessors of commercial establishments are
required by law to register their leasing activities with the BIR. Failure to register is punishable by
a fine of not less than P10,000 and suffer
a. imprisonment of not less than 1 year but not more than 10 years.
b. imprisonment of not less than 2 years but not more than 10 years
c. imprisonment of not less than 1 year but not more than 5 years
d. imprisonment of not less than 2 years but not more than 5 years

53. The documents to be submitted to the BIR as required for the registration of commercial leasing are the
following except: ( Ref: RR 12-2011)
a. Building layout and address
b. Certified true copy of Contract of Lease per tenant
c. The lessee information statement
d. Appraisal for the fair market rent of the unit from licensed appraiser.
54. The rate of CWT for commercial leases is:
e. 2% b. 3% c. 5%. d. 10%

ADDITIONAL FOR NATIONAL TAXATION (BIR)

 Dept. Order 6-2010
o Processing and approval of zonal value has been devolved to Regional Director and RDO
o BIR committees on zonal values
 Executive committee
 Technical committee
 Sub-technical committee
o Basis of zonal values
 Average of the 2 highest recommended values from assessor, BIR and private appraiser
o All revenue officers (RDO) in the entire Philippines are mandated to complete their updating of
zonal values not later than JUNE 30, 2010.

 RMC No. 20-2010

o Revoked BIR Ruling No. DA-245-2005 regarding Build Your Own Scheme and similar schemes
which resulted in non-payment of taxes due to government.

 RMC No. 23-2010

o CAR upon issuance has to be presented to Register of Deeds within 2 YEARS from date of
issuance, otherwise considered EXPIRED. It can be revalidated for another ONE YEAR.

 RR 16-2011
o Increases the threshold of VAT (not subject to VAT) from year 2005 to Dec. 31, 2011
 From P1,500,000.00 to P1,919,500.00 (gross receipts for 1 year)
 From P1,500,000.00 to P 1,919,500.00 ( sale of vacant lot – dealer/developer)
 From P2,500,000.00 to P3,199,200.00 (sale of H&L by dealer/developer)
 From P10,000.00 to P12,800.00 (monthly rental of residential dwelling)

o Consumer Price Index

 CPI 2010 - 166.10
 CPI 2005 - 129.80

o Formula of new threshold

 Value of current year = CPI of current year
Value of base year CPI of base year

VAT Rate
Up to January 31, 2006 - 10%
February 1, 2006 to present (2012) - 12%

Computation:
Value 2012 (??) = 166.10
P1,500,000.00 = 129.80

Solution : By Cross Multiplication

Value 2012 = 166.10 x P1,500,000.00 / 129.80 = P1,919,491.52 or P1,919,500.00
Value 2012 = 166.10 x P2,500,000.00 / 129.80 = P3,199,152.54 or P3,199,200.00
Value 2012 = 166.10 x P 10,000.00 / 129.80 = P12,796.61 or P 12,800.00